The International Energy Authority says global offshore wind capacity may increase 15-fold and attract around $1 trillion of cumulative investment by 2040.
The IEA has published the Offshore Wind Outlook 2019 as an excerpt from its full World Energy Report due out next month.
The global offshore wind market is set to expand significantly over the next two decades, growing by 13% per year in the ‘Stated Policies Scenario’.
Bolstered by policy targets and falling technology costs, global offshore wind capacity is projected to increase fifteen-fold to 2040, becoming a $1 trillion industry over the next two decades – matching capital spending on gas- and coal-fired capacity over the same period. This level of investment means that offshore wind accounts for 10% of investment in renewables-based power plants globally.
Europe remains the technology leader to 2040, but China closes the gap spurred by recent efforts to expand their construction capacities for offshore wind. In the United States, state-level targets set the course for rapid growth over the next decade.
India, Korea and Chinese Taipei also have ambitious targets, while other countries, including Japan and Canada, are laying the groundwork for future offshore wind development.
The report says that Europe has pioneered offshore wind technology, and the region is positioned to be the powerhouse of its future development. It says that offshore wind capacity in the European Union stands at almost 20 gigawatts.
Under current policy settings, that is set to rise to nearly 130 gigawatts by 2040. However, if the EU reaches its carbon-neutrality aims, offshore wind capacity would jump to around 180 gigawatts by 2040 and become the region’s largest single source of electricity.
The report says its predictions are driven by falling costs, supportive government policies and some remarkable technological progress, such as larger turbines and floating foundations but that offshore wind technology has the potential to grow far more strongly with stepped-up support from policy makers.
An even more ambitious vision – in which policies drive a big increase in demand for clean hydrogen produced by offshore wind – could push European offshore wind capacity dramatically higher.
Combatting air pollution will drive change in China
It says that China is also set to play a major role in offshore wind’s long-term growth, driven by efforts to reduce air pollution.
The technology is particularly attractive in China because offshore wind farms can be built near the major population centres spread around the east and south of the country. By around 2025, China is likely to have the largest offshore wind fleet of any country, overtaking the United Kingdom.
China’s offshore wind capacity is set to rise from 4 gigawatts today to 110 gigawatts by 2040. Policies designed to meet global sustainable energy goals could push that even higher to above 170 gigawatts.
The United States has good offshore wind resources in the northeast of the country – near demand centres along the densely populated east coast, offering a way to help diversify the country’s power mix. It says that floating foundations would expand the possibilities for harnessing wind resources off the west coast.
Dr Fatih Birol, the IEA’s Executive Director said: “In the past decade, two major areas of technological innovation have been game-changers in the energy system by substantially driving down costs: the shale revolution and the rise of solar PV. Offshore wind has the potential to join their ranks in terms of steep cost reduction.”
The IEA says the huge promise of offshore wind is underscored by the development of floating turbines that could be deployed further out at sea. In theory, they could enable offshore wind to meet the entire electricity demand of several key electricity markets several times over, including Europe, the United States and Japan.
Birol added: “Offshore wind currently provides just 0.3% of global power generation, but its potential is vast. More and more of that potential is coming within reach, but much work remains to be done by governments and industry for it to become a mainstay of clean energy transitions.”
The report says that governments and regulators can clear the path ahead for offshore wind’s development by providing the long-term vision that will encourage industry and investors to undertake the major investments required to develop offshore wind projects and link them to power grids on land.
It says that includes careful market design, ensuring low-cost financing and regulations that recognise that the development of onshore grid infrastructure is essential to the efficient integration of power production from offshore wind.
Oil and gas sector could deploy offshore expertise
It adds that huge business opportunities exist for oil and gas sector companies to draw on their offshore expertise. An estimated 40% of the lifetime costs of an offshore wind project, including construction and maintenance, have significant synergies with the offshore oil and gas sector. That translates into a market opportunity of USD 400 billion or more in Europe and China over the next two decades.
Offshore wind is in a category of its own, as the only variable baseload power generation technology. New offshore wind projects have capacity factors of 40%-50%, as larger turbines and other technology improvements are helping to make the most of available wind resources.
At these levels, offshore wind matches the capacity factors of efficient gas-fired power plants, coal-fired power plants in some regions, exceeds those of onshore wind and is about double those of solar PV.
Offshore wind output varies according to the strength of the wind, but its hourly variability is lower than that of solar PV. Offshore wind typically fluctuates within a narrower band, up to 20% from hour-to-hour, than is the case for solar PV, up to 40% from hour-to-hour.